Movado Group (NYSE: MOV) announced fiscal fourth-quarter 2019 results on Thursday morning, highlighting accelerating top-line growth and margin expansion even without the help of its recent acquisition of MVMT. Movado also provided an encouraging look at its plans for the coming year.
With shares of the watchmaker up more than 21% in today's trading as of this writing, let's dig deeper to see what drove its latest exceptional quarter.
Image source: Movado Group.
Movado Group results: The raw numbers
Fiscal Q4 2019*
Fiscal Q4 2018
GAAP net income
GAAP earnings per share
DATA SOURCE: MOVADO GROUP. *FOR THE QUARTER ENDED JAN. 31, 2019. GAAP = generally accepted accounting principles. YOY = year over year.
What happened with Movado Group this quarter?
- Net sales grew 35.4% on a constant currency basis, and rose 10.3% excluding MVMT (accelerating from 9.6% growth last quarter).
- On an adjusted (non-GAAP) basis, which excludes one-time tax items and acquisition expenses, net income was $15.9 million, or $0.67 per share, up from $12 million, or $0.52 per share in the year-ago period.
- By comparison, analysts' consensus estimates called for lower earnings of $0.55 per share on revenue of $194.2 million.
- Movado ended the quarter with cash and cash equivalents of $189.9 million.
- The company repurchased roughly 101,000 shares this quarter, leaving $40.6 million remaining under its share repurchase authorization as of Jan. 31, 2019.
What management had to say
Chairman and CEO Efraim Grinberg stated:
Our positive momentum continued in the fourth quarter, representing a strong end to a robust year of sales and profit growth for Movado Group. We experienced significant gross margin expansion in the fourth quarter, both with and without MVMT. Fiscal 2019 marked another year of progress on our strategies -- to deliver innovation across our portfolio of powerful brands in an omni-channel market, capitalize on our strong balance sheet and cash flow to acquire new brands and develop our digital presence. These activities fueled topline growth of nearly 20% with strong growth in operating income and net income for the year while we continued to invest for the long term. During the year, we acquired MVMT, which together with Olivia Burton, which we acquired last year, allows us to increase our presence in the global fashion watch market and will help to fuel our e-commerce expansion as well as leverage our global distribution capabilities.
For the full fiscal 2020, Movado expects net sales of $750 million to $765 million, good for growth of roughly 11.5% at the midpoint, with net income per share in the range of $2.70 to $2.80. By comparison, most analysts were modeling higher earnings of $2.90 per share on revenue closer to $738 million.
That said, Movado elaborated that this guidance includes both the continued integration of MVMT into its systems and distribution platform, as well as "significant brand building investments across its portfolio" -- both of which help explain its bottom-line shortfall relative to expectations.
Coupled with its continued outperformance to end fiscal 2019, this outlook offers more than enough reason for Movado shareholders to rejoice -- and the stock is responding in kind today.
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